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EMERGING MARKETS-Latam FX mixed, stocks slip as trade concerns weigh

Oct 8 (Reuters) - Latin American currencies were mixed on Tuesday with Brazil's real bouncing back from its steepest drop in more than two weeks, while stock markets in the region declined on fading hopes for progress in the upcoming U.S.-China trade talks. Reports that the Trump administration was moving ahead with discussions around possible curbs on capital flows into China and Beijing would cut short the stay of its delegation by one night kept investors nervous about the outcome of the trade talks, scheduled for Oct. 10-11. The Brazilian real edged up 0.4% after shedding about 1.2% on Monday following a report Brazilian Economy Minister Paulo Guedes would leave in February. Guedes later said there was absolutely no basis for the reports. The main Bovepsa stock index slid 0.2%, extending Monday's losses as heavyweight miner Vale and other steel companies declined despite a rise in iron ore futures.

Vale said it had paid 860 million reais ($210 million) in emergency damages relating to the Brumadinho tailings dam disaster. Countering those losses, shares in Eletrobras jumped 4.5% after the state-run utility said it was discussing with the government capitalization of 3.9 billion reais ($950 million) in advances received from the Treasury. If agreement is reached, the loans would become capital and be removed from the company's debt load. The Mexican peso edged 0.12% lower, while the Chilean peso dropped 0.7% after domestic data showed consumer prices were unchanged in September and annual inflation was at the bottom of the central bank's target range as the country's all-important mining sector continues to lag. The Argentine peso was unchanged. President Mauricio Macri announced a tax incentive proposal aimed at boosting employment among young people on Monday, in a bid to gain ground with a voter demographic that contributed to his poor showing in an August primary.

Key Latin American stock indexes and currencies at 1404 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 994.06 -0.01MSCI LatAm 2629.93 -0.74Brazil Bovespa 100440.32 -0.13Mexico IPC 42722.70 -0.53Chile IPSA 5031.71 -0.38Argentina MerVal - -Colombia IGBC 12924.46 -0.4Currencies Latest Daily %

change

Brazil real 4.0869 0.39Mexico peso 19.5888 -0.12Chile peso 722.5 -0.65Colombia peso 3458.54 -0.31Peru sol - -Argentina peso (interbank) 57.8300 -0.14

(Reporting by Sruthi Shankar in Bengaluru; Editing by Steve Orlofsky)